That is a no brainer , and something that would be relevant if you were actually ' matching ' the quarterly or half yearly repayments or even your monthly accruals with your sales receipts from your outstanding debtors. And this would have to be done ' exactly '. But we know that that is not the case , and in fact the accruing interest has not been able to have been covered from earning pretty much thus far. If this were to continue , you would obviously have a situation where your ongoing production , operating costs , re-current operating capex , and sales would effectively have been put on the ' Credit Card ' .
So in this situation where you are continuing to capitalize the interest to the loan while spending the receipts in continuing the operations , you would in effect be left with the $500 million of ' Booked ' $aud debt in your balance sheet , and subject to whatever the exchange rate would be in the future. For instance if the aud progressively dropped down to 55 cents in the near term . This would then be equivalent to a 27.27 % interest rate and a risk to a further blow out in the debt to potentially $568 million should no repayments of interest or principle be made on the debt throughout the 3.5 years term to expiry.
This is why I feel as though Buckler and Co will do something to change this outcome in the nearer term.....
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